For $399, I am assuming that is the 5.56 kit you are referring to? I think the 5.45 and 7.62 kits are both cheaper. The quick answer is that any stamped receiver can be made to work. However, it would be best to just pick up a 5.56 AK (or 5.45 if postban is OK) and work from there. If you want to keep all the "evil" features, a pre-ban 84s would be the best route - try to find a real beat up, shot out one for cheap - after all, you're going to be replacing most of the stuff anyways. A pre-ban 7.62 gun would need more work - I believe the rails are a bit shorter on those as well as the mag wells a bit larger.
If you're going postban, there was also a Norinco model available (forget the designation - nmh-91, maybe) as well as the SAR-2 or SAR-3 series. I believe Ohio Ordnance also made an ak-74 receiver, which will work nicely and you can use the trunion that came with the kit (see below) - not sure if they're still being produced however, and if I remember correctly, they were pretty expensive. I've also seen some barreled 5.45x39 actions which would probably work, and save you some $$$ as you wouldn't need to buy the whole rifle.
However, if you are going to have it built on an existing gun, there are some things to consider - namely, the front trunion is often where the serial number is stamped, and not in fact on the receiver. I know my 84s is this way, and I think my SAR-1 and 2 are as well (not at home to check at the moment). What this means is that swapping out the trunion with the correct one that comes in your kit is of questionable legality. Basically, removing the serialized trunion is removing the serial number from the rifle (even if you stamp it on the new trunion), and apparently the only entity the ATF allows to legally reserialize a firearm is the original manufacturer. Several people have apparently tried to get a final answer from the ATF regarding this, but it seems to be a pandora's box they don't want to open. Some gunsmiths will do this, other's won't. So... if you want to remain without a doubt 100% legal, you need to use the original trunion, which will mean you'll either need to sleeve the barrel, or turn down the barrel or open up the trunion as necessary.
I don't have the details of the 5.56 kit, but I have a 5.45 kit that I am going to have built on my 84s, and the barrel for the 5.45 is of a slightly smaller diameter than the chinese 5.56, and so it will need to be sleeved. Many people have had this done, however, and it seems work out just fine.
A good place for more information would be the Krinkov forum over at http://www.ak-47.net .
Rocko